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The point of a public equity listing is to be able to access public markets for financing, to use the stock as a currency for acquisitions, and to provide liquidity for investors. A company’s cost of equity moves inversely with its stock price, just like bond yields and prices. Access to cheap equity is vital […]
Fund flows will always beat fundamentals. This was rarely more evident than in the performance of MLPs last year. Throughout 2018, earnings reports from pipeline companies were generally in-line, with positive guidance. Operating results contrasted with stock prices, which confounded investors and management teams as they sagged. Negative sentiment worsened late in the year, not […]
Energy infrastructure roared higher during the first six trading days of January. After four days, the sector had recovered December’s losses. Two days later, it had almost recouped all of 2018. It was a complete reversal of last month, when slumping equity markets dragged pipeline stocks lower. It’s looking increasingly likely to us that automated […]
Blog pageviews and comments help us gauge how relevant our topics are. Writing is more enjoyable when readers engage. This blog gets reposted across many websites, including Seeking Alpha and Forbes.com. The feedback from subscribers often leads to a useful dialog and informs later choice of topics. Below are the themes that resonated in 2018. […]
Last week Antero Midstream (AM) became the latest MLP to simplify their structure. This is further evidence of the declining opportunity set for MLP-dedicated funds, and cause for investors to seek exposure to energy infrastructure that goes beyond MLPs to include corporations (see The Uncertain Future of MLP-Dedicated Funds). Like many MLPs before them, Antero […]
Technical analysis shows that the outlook for pipeline stocks is bullish. We rarely write on technicals, since we’re relentlessly focused on the fundamentals. But fundamental news has been light, with prices drifting irregularly lower. Investors are overwhelmingly frustrated with the failure of pipeline company stocks to reflect growing throughput volumes. The U.S. just claimed World’s […]
Last week the U.S. became the world’s biggest crude oil producer. Not everyone agrees – Russian production figures still show them ahead. But the Energy Information Administration (EIA) is confident that we are, and that we’re going to stay there at least through next year. This represents a milestone in the path towards American Energy […]
Although MLPs are cheap by historical standards, the persistence of their attractive valuation should prompt observers to think a little harder. The almost 5% yield spread between the Alerian MLP Index and ten year treasuries is 1.5% wider than the 20-year average of 3.5%. However, the MLP yield spread to treasuries has been historically wide […]
A few months ago the NYTimes ran an interesting piece on the difference between intra-day and overnight returns on the stock market. The article compared a strategy of buying on the open and selling every day at the close (“IntraDay”), with a strategy of buying on the close and selling the next morning at the […]
There is around $53BN invested in MLPs via ’40 Act funds – the term used to describe the three major types of funds issued under the 1940 Investment Company Act (mutual, exchange traded and closed end funds). It’s safe to say that an important motivating factor driving these selections is investors’ desire to hold Master […]
